Fiduciary for a Social Security Disability Recipient

Many people receiving Social Security disability have difficulty handling their own financial affairs. Their disability may cause them a mental or physical impairment that prevents them from handling money, bills, contracts and basic communication with anyone with whom they do business. In these cases, Social Security allows a third party to step in and assist as a representative payee (fiduciary). The agency sets down guidelines and rules for anyone acting as a representative payee for a disability recipient.

If you have power of attorney or even if you are an appointed legal guardian, you are not necessarily allowed representative payee status for a disability recipient. Social Security grants this authority only to individuals who apply for it and subjects each application to a thorough review. Minor children and adults who have been legally found incompetent to handle their own affairs must have appointed representative payees to receive disability benefits.

If you wish to handle disability benefits for another beneficiary, you must apply by filing Form SSA-11, a request to the Social Security Administration to be designated as a representative payee. You must prove your identity and your relationship to the beneficiary, submit financial information and attend an interview at your local Social Security office.

As a representative payee, Social Security authorizes you to receive and manage disability benefits on behalf of someone else. You are responsible for keeping track of the payments, handling medical bills, everyday spending and the beneficiary's general finances. You must provide regular reports to Social Security accounting for money received and spent. Social Security also expects you to responsibly manage money that is received but not spent by opening a savings account and report any important changes in the beneficiary's medical condition or circumstances, particularly if the beneficiary begins working and earning money.

You are authorized to spend money on behalf of the beneficiary for personal expenses, including housing, food, clothing, transportation and normal incidentals. You may not spend the money on yourself or collect any fee for acting as a representative payee. In addition, you do not have authority to spend any money earned outside of Social Security disability benefits. This means a fiduciary must keep a strict accounting of benefits earned and expenses paid, so that the amounts match.

Social Security reserves the right to review your accounts as representative payee at any time. The agency will revoke the authority to receive and manage benefits if it suspects a fiduciary is not following the rules or diverting money for his personal use. You must also make sure to inform Social Security of any important changes, such as the death of the payee, that will affect his benefit eligibility. Failure to do so can subject you to a criminal investigation.